chap 7 feasibility study

8/2/2019 Chap 7 Feasibility Study

http://slidepdf.com/reader/full/chap-7-feasibility-study 1/25

What is a Feasibility Study

Is this a good business idea?

Helps answer the question ofwhether to go forward with the

business idea.



Feasibility Analysis

“A measure of how beneficial or practical

the development of a software system willbe to an organization. This analysis recursthroughout the life cycle.”



Feasibility Checkpoints

Production

System

TechnicalDesign

Business

Requirements

Existing System Planned ProjectPlanning

Support

Implementation Design

Analysis

“creeping commitment

approach”



Feasibility Checkpoints

• systems analysis -- study

– urgency? rough cost estimate

• systems analysis -- definition

– clearer scope, refined cost estimate

• systems design -- selection

– adjust scope, schedule, costs

• systems design -- procurement – option check before letting contracts

• systems design -- detail design

– one last chance to cancel or downsize

Production

System

Technical

Design

Business

Requirements

Existing System Planned ProjectPlanning

Support

Implementation Design

Analysis




A feasibility study is valuable for:

• Starting a new business

• Expansion of an existing business

• Adding an enterprise to an existingbusiness

• Purchasing an existing business




A feasible business will:

• Generate adequate cash flow and profits,

• Withstand risks,

• Remain viable in the long-term

• Meet the goals of the founders




Evaluate Alternatives

The feasibility study helps to “frame” and

“flesh-out” specific business scenarios

so they can be studied in-depth.




Pre-Feasibility Study

May help sort our alternatives anddetermine if a full-blown feasibility study

is warranted.




Market Assessment

A market assessment may be conductedfirst to identify market opportunities. Ifno opportunities exist, there may be no

reason to proceed further.




Study Results

Outline in depth the various businessscenarios examined and the

implications, strengths and weaknesses

of each.




Go/No Go Decision

The feasibility study will be a majorinformation source in making this critical

decision.



Reasons Not to do a Study

• We already know it is feasible.• We did a study a couple of years ago.

• Just a way for consultants to make money.

• The company selling us the equipment says itis feasible.

• Lets hire a general manager and have him dothe study.

• Waste of time – we need to buy the site andbegin construction.



Reasons to Do a Study

• Gives focus to the project.• Narrows the business alternatives.

• Identifies new opportunities.

• Identifies reasons not to proceed.• Provides valuable information for “go/no go”

decision.

• Increases probability of business success byidentifying weaknesses early.



Reasons to Do a Study

• Provides documentation that the idea wasthoroughly investigated.

• Helps attract funding from lenders, grantproviders, etc.

• Helps attract equity investment



Not the Business Plan

• Feasibility study conducted before decision to proceed (go/no go).

• Business plan prepared after decision

to proceed (go/no go).

• Feasibility study provides investigative function.

• Business plan provides planning function.



Feasibility Study Outline

1.Feasibility Process

2.Economic Feasibility Study

3.Technical Feasibility Study

4.Behavioral Feasibility Study



1. Eight Steps in Feasibility Study1. Form a project team and appoint a project

leader2. Prepare system Flowcharts

3. Enumerate potential candidate systems

4. Describe and identify characteristics of thecandidate systems

5. Determine and evaluate performance and cost

effectiveness of each candidate system6. Weight system performance and cost data

7. Select the best candidate system

8. Prepare and report directive to management



2. Economic Feasibility Study• The purpose of an economic feasibility study

(EFS) is to demonstrate the net benefit of aproposed project for accepting or disbursingelectronic funds/benefits, taking into

consideration the benefits and costs to theagency, other state agencies, and the generalpublic as a whole.

• The EFS is composed of two required forms:

1. Business Case

2. Cost Benefit Analysis



Business Case

• The Business Case provides an analysis of thebusiness environment including a description ofwho the expected customers are, the nature of thebusiness, how the payment is currently being

processed, if applicable, and the current andexpected volume and timing of transactions.

• The Business Case also presents the benefits ofthe proposed project.

• The Business Case includes a description of theassumptions made in the economic feasibilityanalysis and the reasoning behind those

assumptions.



Cost Benefit Analysis

• The Cost Benefit Analysis summarizesthe revenues and costs involved with the

proposed project.

• The amounts in the Cost BenefitAnalysis should reflect the amounts andassumptions in the Business Case.

• An analysis summarizing the impact tothe agency, other state agencies, and

the general public is also included, as

applicable.

E i f ibilit l t



Economic feasibility elements

include, but are not limited to:• Increased agency revenue,

• Decreased agency revenue,

• Increased agency costs,

• Decreased agency costs,

• Increased revenue to other agencies and/or thegeneral public,

• Decreased revenue to other agencies and/or the

general public,• Increased costs to other agencies and/or the general

public,

• Decreased costs to other agencies and/or the generalublic and Other ublic benefits.



Technical Feasibility • The Technical Feasibility Study assesses the details

of how you will deliver a product or service (i.e.,materials, labour, transportation, where yourbusiness will be located, technology needed, etc.)

• Think of the technical feasibility study as the

logistical or tactical plan of how your business willproduce, store, deliver, and track its products orservices.

• A technical feasibility study is an excellent tool fortrouble-shooting and long-term planning. In someregards it serves as a flow chart of how yourproducts and services evolve and move through

your business to physically reach your market.



Feasibility Report

• The report contains the following section:1. Cover Letter

2. Table of Contents

3. Detailed Findings

4. Economic Justifications

5. Recommendations & Conclusions

6. Appendixes



Oral Presentation• Introduction

I. Attention-getting statement - gain the attention of the audience by using a quotation, telling a brief story or humorous anecdote, asking a question,etc.

II. Thesis statement - state the specific purpose of your presentation here.

III. Preview statement - overview of all of your main points.

• Body

I. First main point

A. Subpoint

1. Sub-subpoint

2. Sub-subpoint

B. Subpoint

1. Sub-subpoint2. Sub-subpoint

3. Sub-subpoint

II. Second main point

A. Subpoint

1. Sub-subpoint

2. Sub-subpoint

B. Subpoint

1. Sub-subpoint2. Sub-subpoint

3. Sub-subpoint

C. Subpoint

Note: The number of main points, subpoints and sub-subpoints you use will vary depending on how much information you have to convey and howmuch detail and supporting material you need to use. Subpoints and sub-subpoints are comprised of the supporting material you gather in yourresearch.

You should rarely have more than five main points in any presentation.

• Conclusion

I. Summary statement - review all of your main points.II Concluding statement prepare a closing statement that ends your presentation smoothly

chap 7 feasibility study

Documents